iPhone Market Share Could More Than Double When Apple Drops AT&T Exclusivity

Apple is stifling the iPhone's share of the mobile market by selling it through so few carriers. And when it eventually starts selling the iPhone at more carriers per country, its market share could more than double, Morgan Stanley's Kathryn Huberty predicts in a note today. This could drive Apple sales and profits upward.

"In the top six iPhone markets that are still exclusive, we believe that Apple’s market share could rise to 10%, on average, in a multiple carrier distribution model from 4% today. These six markets represented almost 70% percent of iPhone shipments in C2Q09."

For example, if Apple were to sell the iPhone at more U.S. carriers, such as Verizon, she estimates its share of the U.S. market could more than double to 12.2%, up from 4.9% today.

Next year, she sees potential upside of 7.3 million unit sales, for example, as Apple sells the iPhone at more European carriers and enters China and Korea.

As a result, she raised her calendar 2010 revenue and adjusted EPS estimates to $45.3 billion/$10.50 from $44.8 billion/$10.00, as she now expects 41.7 milion iPhone shipments, up from 38.2 million.

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In the last couple of weeks, Apple has agreed multi-carrier iPhone deals with Vodafone and Orange in the important UK market. This will end the exclusivity that 02 has enjoyed since launch. Anticipate this will be rolled out in every key market. AT&T will be the last to fall, I would expect.

The good news for Apple is:
a) market overall share will increase (as Ms Huberty notes);
b) carriers will compete hard to win and retain the high-spend-per-subscriber iPhone user, bringing down the cost of entry from a consumer and business perspective, thus increasing market for...
c) yet more apps, serving yet more needs, for yet more customers, which increases...
d) Apple's domination (and revenue) in the Apps-for-mobile-platforms sector, which means...
e) that when/if Apple's tablet is launched, it doesn't just hit the market as a slinky new piece of premium hardware, but lands into the world's smoothest-to-us, most extensive and most useful 'ecosystem', which further increases...
f) globally dominant position (and revenue) of iTunes/AppStore; and
g) new entrant mobile carriers will basically be laying new cash pipelines to Cupertino's door, at their own expense, and (I expect) paying Apple for the privilege of doing so, whilst submitting to and subsidising...
h) Apple's control over iPhone advertising and marketing campaigns, which builds Apple's brand, not the mobile companies'.

This, and the general overall positive consensus amongst the analysts (200 and up for the share price now being a widespread view), put AAPL in a pretty strong light.